Hungary Monetary Policy

At its 28 February monetary policy meeting, the Central Bank left the base rate unchanged at 7.00%. The decision was expected by the market and followed on a similar move at the previous meeting. The Bank commented on January's inflation spike, noting that the data is surrounded by greater-than-usual uncertainty, due to the indirect tax changes. Moreover, the Bank maintained its view that the unfavourable economic environment, especially in the Euro area, will contribute to a deterioration in the outlook for Hungarian economic growth and thus translate into subdued price pressures. Finally, amid moderating pressure on both the Hungarian forint and government bond yields, monetary authorities turned to a more neutral tone, yet still stating that high volatility of financial markets over the recent period continues to warrant a cautious policy stance.

According to revised data released by the Statistical Institute (KSH) on 13 November, industrial output rose a working-day adjusted 8.1% year-on-year in September, marking an acceleration from August’s 6.8% increase.